1. Field of the Invention
The present invention relates to testing procedures to evaluation property valuations, and more specifically to a method of and apparatus for testing the accuracy of multiple automated valuation models.
2. Background of the Invention
Automated valuation models are increasingly being used in real estate as the first or sole indicator of property value. The valuations provided by these automated valuation models are of varying accuracy. Currently, there exists no standardized means by which to compare the accuracy of one automated valuation model to that of another. The “confidence scores” often included along with any automated valuation produced are only indicators of a particular automated valuation model's internal evaluation that its own valuation is more or less accurate and often bear no relation to the internal evaluations of other automated valuation model valuations.
Therefore, a means by which these automated valuation models' accuracy at providing valuations would prove very useful. Providing a means to gauge the accuracy of one automated valuation model against that of another enables the automated valuation consumer to choose the preferable automated valuation model on which to rely. Generally speaking, automated valuation models may be more or less accurate depending on the geographic area or price range of the property. Therefore, a means of testing the accuracy of automated valuation models that is capable of categorizing valuations by geographic area, economic tier, or property type would also be useful. There currently exists no empirically based ranking system for automated valuation model accuracy. Further, there currently exists no accurate and up-to-date data upon which to base such a ranking system.
It is therefore an object of this invention to provide a means by which automated valuation models may be compared against each other for accuracy. It is a further object of this invention to provide this means in particular sub-divisions such as geographic areas, price ranges, price tiers, and property types. It is a further object of this invention to provide a useful data set for comparing these automated valuation models and for evaluating the rankings computed using this method.
These and other objectives of the present invention will become apparent from the following description of the invention.